JPMorgan Chase Posts Strong Results

New York money-center bank JPMorgan Chase & Co. (NYSE: JPM – $111.43) said its quarterly profit surged 35% to an all-time high, as a strong economy and nearly a quarter-billion dollars in tax savings boosted results. The bank’s total revenue rose 12% to 27.91 billion and the nation’s largest bank by assets, reported an adjusted profit of $8.71 billion, or $2.37 a share, up from $1.65 a share last year. Analysts had expected earnings of $2.28. A lower tax bill contributed to the bottom-line gains as JPM paid an effective income-tax rate of 18.3% in the first quarter, compared with 48.7% in the fourth quarter of 2017 and 22.7% in last year’s first quarter.

Fixed-income trading revenue rose 8% to $4.55 billion, while stock-trading revenue grew 26% to $2.02 billion. At the lender’s corporate and investment banking unit, overall profit was $3.97 billion, slightly higher than the $3.24 billion it reported in the same period last year. A drag on the segment was its investment banking revenue, which fell 7%, as it underwrote fewer debt and equity offerings during the period. In the consumer bank business, profits were $3.33 billion, up two-thirds from the first quarter a year ago. The company’s commercial bank segment earned $1.03 billion, a 28% increase from the 2017 first quarter, and the bank’s asset and wealth management unit reported profits of $770 million, double the $385 million it earned last year. Chase said it set aside $1.17 billion to cover potentially bad loans compared with $1.31 billion in the fourth quarter of 2017 and $1.32 billion in the first quarter of 2017.

Wall Street pegs adjusted full-year earnings per share at $8.91 vs. last year’s $6.92 and early estimates for next year are at $9.79, providing for a more-than-reasonable valuation. Dividends have risen about 44% over the past five years to yield 2% at current levels at the present $2.24 per share annual rate and additional payouts are likely later this year. The shares can continue to be held in a well-diversified aggressive account.